Mills Act Property Tax Abatement Program

For property owners living within Long Beach historic districts, the Mills Act may work for them to reduce their property taxes: The State describes it as: "A formal agreement, generally known as a Mills Act or Historical Property Contract, is executed between the local government and the property owner for a minimum ten-year term. Contracts are automatically renewed each year and are transferred to new owners when the property is sold. Property owners agree to restore, maintain, and protect the property in accordance with specific historic preservation standards and conditions identified in the contract. Periodic inspections by city or county officials ensure proper maintenance of the property. Local authorities may impose penalties for breach of contract or failure to protect the historic property. The contract is binding to all owners during the contract period."
This process includes bringing it before City Council for approval. Find historic districts under "community information" here.

What Caused This Market Anyway?

If you're looking for a fresh explanation for your buyers who are afraid they're buying at the wrong time and you're looking for solved real estate mysteries late at night, like how did the subprime mortgage market and our technologically driven society affect real estate, this 44 page article by two economists might have some answers: ..."the housing boom has not been driven by unusually loose monetary policy [i.e., not the Federal Reserve's low interest rates for the last several years]. This is not to say the monetary policy has not been unusually loose, but that to the extent it has been loose, this is not what has been driving spending on housing. Second, the current levels of spending on new housing are largely explained by technology-driven wealth creation over the previous decade. Third, changes in the demographic, income, educational, and regional structure of the population account for about one-half of the increase in homeownership. That is, without any other developments, the homeownership rate is likely to have gone up anyway, but not by as much as it has done. The last finding is that substitution away from rental housing made possible by developments in the mortgage market, such as subprime lending, could account for a significant fraction of the increase in residential investment and homeownership." --From "The great turn-of-the-century housing boom" by Jonas D. M. Fisher and Saad Quayyum.

The Return to a Normal Market?

This Los Angeles Times article (July 23, 2006) may not stay available online much longer, but it's a good discussion of the current Southern California market picture. People afraid of a return to the '90's recession may be worrying unnecessarily. As has been stated often, the market fundamentals today are vastly different than those of the '90s, says John Karevoll of Dataquick Information Systems. He, and many other economic sources including California Association of Realtors, still predict an overall appreciation in the median home price of 6% or more, in the Southland and statewide. While one simply cannot know all the future events, Karevoll is willing to be quoted saying in a worst-case scenario, homeowners should not lose more than 7% of their homes' value. So the current standoff between buyers and sellers, with buyers waiting for a huge drop in prices, is not supported, not in this article anyway. Areas with overbuilding in condos have seen a drop, but that does not mean all condo prices in all areas are losing. Some sales figures, or lack thereof, reflect a dropoff in activity after a long held back huge demand has been met, and then overmet. The frenetic activity from selling a home in a week or two has definitely slowed, but many younger buyers see that as a "drop in the market" because they never experienced anything else, or what the historical "norm" has been of 30-90 days on the market.

Housing Demand Keeps Prices Up

California has the second-highest increase in the number of housing units of any state last year, adding over 181,000 new dwellings. Yet house building sources and others say that California should be building 250,000 new units per year, and that we are not keeping up with the demand in this state. This demand will maintain the real estate for many years into this future in the west, due both to immigration from other states and other countries, and natural population growth.

Dataquick: Median Prices Still Higher Than 2005

While numbers of homes sold are lower according to Dataquick's information, median home prices (single family and condo prices together)in the Southern California counties, except San Diego County, are still higher than the same time in 2005. Typically the condo market is a lower priced market than single family homes within most areas. The zip code charts provide a much more specific breakdown by zip code and by type, so carefully check your area to view comparison information and actual local market sales medians.

Federal Reserve: No Changes for Now

After 24 increases in the federal funds interest rate, the Federal Reserve holds off on further increases this week. There may be more increases in the future, but the cooling in the housing market and moderated economic growth are the current reasons cited for no further hikes at this time.

Rent vs. Buy: Buying Is Better

According to the National Association of Reators, the Federal Reserve Board estimates that homeowners have a net worth nearly 36 times more than that of renters. Over the past 10 years, the cost of rental housing in the United States has increased an average of 3 percent per year; average rents are projected to rise 4.1 percent this year alone. With a 3 percent annual increase, a current rental payment of $1,000 per month would increase every year and amount to $137,567 after 10 years, with no wealth accumulation.

In contrast, a $210,000 home purchased today with a downpayment of $10,000 and a 30-year fixed rate mortgage at 6.5 percent would cost a steady $1,100 per month and yield a net worth of $138,521 after 10 years, assuming an historic 4.5 percent annual appreciation rate.

Current Housing Price Picture

Just lately there's been a lot of media focus on the condo prices, i.e., they're falling, but if you read closely, the articles are about certain markets. Condos closer to the coastline in Long Beach are anywhere from $300,000 up to $1,000,000 plus. With the slower market, buyers and sellers are each hugging their own trees, waiting for other's to fall down first. Condo conversions are in oversupply in some markets, but in the coastal areas of Long Beach, condos are still an entry level home buy for otherwise expensive single family neighborhoods. As Kenneth Harney says here, "scour the market for properties that may never be cheaper, or even available."